This morning as you drove into work you probably experienced some of the dangers caused by distracted drivers around you – talking on cell phones, texting, following too closely, or otherwise not following safe driving practices. Based on 2012 motor vehicle data from the U.S. Consumer Product Safety Commission and the Centers for Disease Control and Prevention (CDC), more than 2.5 million adult drivers and passengers were treated in emergency departments after being injured in a motor vehicle crash. Of those treated, over 164,000, or about 52 out of every 100,000 people in the country are hospitalized each year as a result of a serious injury. While this number has dropped dramatically over the last twenty years the cost of a serious injury continues to have a dramatic impact on families and on society as a whole. In 2003 the CDC determined the economic costs over a lifetime for an individual with a severe impairment to be approximately $1 million. Since that time, the cost of health care has risen dramatically. These costs can have a devastating effect on a family.
There are many definitions for the word “disability”, from restrictive definitions that allow access to certain services or government provided entitlements, to broad definitions that are more reflective of the impact that disability has on society. The United States Census Bureau uses a definition for disability that includes impairments, activity limitations, and factors that restrict participation. Disability is categorized into three broad domains: communicative, mental and physical.
Significantly, 56.7 million people (18.7% of the population) were considered disabled in 2010, and of those about two-thirds (12.6% of the population) were considered severely disabled. This is a significant increase from only five years earlier.
Incidence of Disability Rises with Age
The Administration on Aging, a department of Health & Human Services, estimates that the U.S. population is aging quickly.
People age 65 and over represented 12.4% of the population in 2000. By 2030, as much as 19% of the population will be age 65 and over. This represents a doubling of the senior population during this 30 year time span. With the population aging, the incidence of disability will rise substantially. The chart above from the United States Census Bureau shows how the prevalence of disability increases as the population ages. The most frequently cited contributing causes of disability as the population ages are loss of hearing, mobility and memory.
Wider Effects of Disability
• Reducing earning potential
• High costs of care
• Burdens of care on family members
• Physical and mental health conditions
• Less opportunity to earn income
• Reduced contributions to savings
• Disruption to personal and family life
• Out-of-pocket expenses
Employer & Government Impacts:
• Lost productivity
• Reduced tax revenues
The Financial Impact of Disability
Whether caused by accident or illness, disability can be financially catastrophic for a family. One notable statistic from the Social Security Administration estimates that just over 1 in 4 of today’s 20 year-olds will become disabled before the age of 67. Planning for the possibility of disability should be an important consideration in any financial plan; however many people are financially unprepared. As an example of the financial impact of disability, consider a couple whose financial plan is significantly impacted by a suddenly occurring disability that stops the husband from working at the age of 55. This would be a full 10 years before the couple’s planned retirement. The combination of reduced income and increased spending to deal with the disability can overturn a financial plan that had been on track to last until at least the age of 90 to one where all of the couple’s savings would be exhausted by the age of 77. By comparison, if the couple had sufficient disability insurance coverage – through an employer plan or purchased personally – the financial damage could have been greatly reduced. The cost of a disability insurance policy varies widely depending on personal circumstances, age and the length of the elimination period chosen. A policy with a 90 day elimination period that would provide a monthly benefit of $3,000 may only cost about $85 per month, or about $1,000 per year.
- Cost of living adjustments
- Return of policy benefits
“Own Occupation” benefit rider (This option is recommended for professionals or skilled workers and protects against the loss of benefits in the event that the insured is able to return to any gainful occupation other than their chosen field.)
Adapting to Change
When an individual becomes disabled, everything in their life changes, not just for themselves,but for their families as well. Individuals with disabilities require assistance with the most basic tasks, be it from caregivers, family members or supportive friends. According to statistics published by the Family Caregiver Alliance, most caregivers care for a relative. Of the family members supported, about half of the caregivers provide support for parents, and about one-third care for their spouses. The most support is provided in the following areas:
Healthcare Support & Management
• Transportation to appointments
• Assistance in purchasing and managing medications
• Assistance in learning about and accessing available support services
Home Support & Maintenance
• Running errands
• Helping with finances
Employers have important social and legal responsibilities that to accommodate both workers with disabilities and their employees who have responsibilities to care for loved ones with serious health concerns. Workers with a disability are more likely to have only part time work (33%) as compared to workers who have no disability (19%). Part-time employment reduces the income level that workers with a disability are able to earn. According to a 2012 report by the Bureau of Labor Statistics barriers to employment for persons with a disability include a lack of education or training, lack of transportation to the workplace, and the physical environment of the workplace. The cost of disability in the U.S. is considerable. For example, absenteeism to provide care for a disabled relative negatively impacts the American economy at a rate of 2.8 million workdays each year, costing employers more than $74 billion annually. These costs include decreased productivity and output, lost sales, and reduced customer service.
Dealing with the High Cost of Disability
The high cost of disability can be a large burden for many families. Fortunately there are a large number of programs, services and other opportunities available to help. Areas where help will be most beneficial include tax deductions, social benefits, financial support, and assistance with day-to-day living.
Private Business Offerings
In looking for assistance, individuals with disabilities and their caregivers look not only towards their governments, but also towards the businesses with which they interact on a regular basis. Businesses can make their premises easier to access through the use of ramps, powered doors, removal of physical obstacles that make visiting more challenging, and by offering better access to other consumer friendly interactive devices. Consumer friendly packaging and instructions that are easier to use by persons with disabilities is also important. The government supports businesses in helping make their workplaces accessible for clients and employees, through programs such as the Disability Access Credit which helps lower taxes for small businesseson eligible expenditures.
Government Service Offerings
Federal and state governments have a wide variety of programs in place to help individuals with disabilities with both their financial and service needs. Income support is provided in many ways by the government. These are some of the federal programs available to individuals with disabilities.
Social Security Disability Benefits:
These benefits are limited to individuals who cannot work because they have a medical condition that is expected to last for at least one year or result in death. Qualification also requires meeting the “recent work test” and a “duration of work” test. Partial disability and short-term disability situations are not covered under Social Security Disability Insurance. Benefit amounts are calculated using a complex formula that includes how much has been paid in Social Security taxes over a period of years. The average monthly benefit paid in 2013 was slightly over $1,000 per month. For these reasons personal disability insurance coverage is important, in order to make up for any gaps in coverage from the Social Security Disability Benefits.
Supplemental Security Income:
Payments under this program are made to people with low income who have limited resources, and are at least age 65 or are blind or have a disability. The basic federal amount of Supplemental Security Income is consistent nationwide, and many states add additional amounts to top up the benefit. For 2014, the monthly maximum federal amount is $721 for eligible individuals, and $1,082 for eligible individuals with an eligible spouse.
There are a number of programs available specifically for veterans which include: support from the Veterans Administration to pay for adaptive equipment, transportation, financial assistance and services for family caregivers, clothing allowances, and outreach to meet the employment needs of disabled veterans. Other Programs: Support for individuals with disabilities is also available to help meet many other needs including: education, training, career assistance, health and medical, counseling, taxes, housing and assistance with daily living.
Both individuals with disabilities and their caregivers need to manage their financial well-being. Caregivers need to incorporate financial planning and many of financial tools listed below for the following reasons:
• To help improve their own financial situation, and to help offset the extra financial costs associated with being a caregiver
• To have plans in place to ensure care continues should they become unable to continue providing care
These tools, together with a well constructed financial plan, can provide the greatest financial benefit for both individuals with disabilities and their caregivers.
Special / Supplemental Needs Trusts
Special trusts can be set up to provide benefits for people with disabilities and at the same time protect the assets in the trust. Designing the trust to ensure that it is compliant with U.S. laws, the disabled beneficiary will still be able to receive government supported health and care benefits under their publically assisted programs such as Medicaid.
Wills and Powers of Attorney
Having a Will and effective powers of attorney are two critical components of an effective financial and estate plan. A Will can help to ensure that financial and personal assets are passed to the most appropriate people. Similarly, having a power of attorney in place will provide the authority for a trusted individual to act, should it become necessary, with respect to personal property. A separate power of attorney should also be created to deal with personal care needs and medical issues.
The person you chose to be your health care agent will have the authority to make life and death decisions on your behalf according the guidance you provide. The right time to make decisions Having Wills and powers of attorney in place is of significant importance when planning for possible incapacity highlighted in an April 2012 report titled “Estate planning in the 21st century: New considerations in a changing society” from the BMO Wealth Institute. The report highlights the importance of estate planning; which includes considerations such as preparing powers of attorney, updating a Will, and ensuring that older relatives, especially those that depend on caregivers are provided for.
Life insurance is a financial tool that can be used to improve a family’s financial well-being. This is especially the case when life insurance is in place to assist with the financial care of the disabled individual that they support or care for. Planning is key Putting in place both disability and critical illness insurances for the caregiver is a proactive planning step that will help to ease financial concerns in the event that changes in the health of the caregiver make it necessary. Having these insurances in place is essential for the well being of the caregiver, but especially important in ensuring that financial resources are available for the well-being of the person with the disability should the caregiver become unable to continue providing care.
Designation of Beneficiaries on Retirement Plans
Designating a beneficiary of a retirement plan, such as an Individual Retirement Account (IRA) is an important financial planning tool to help minimize both income taxes and potentially probate costs. For instance, taxes on retirement accounts can be deferred if these are transferred upon death to a surviving spouse.
We believe proactive planning and professional advice go hand in hand. By working with a BMO financial professional who understands the importance of planning for individuals with disabilities, their caregivers and their families, Americans can develop a thoughtful financial plan and enjoy greater peace of mind.
Time for financial institutions to Take Back Control of market data costs
By Yann Bloch, Vice President of Product Management at NeoXam
Brexit may well be just around the corner, but it is market data spending that financial institutions are more interested in taking back control of right now. In fact, other than regulatory equivalence post the transition period, it is hard to think of a more prominent issue right now than the rising cost of market data. According to analysis at the end of last year by Burton Taylor, global spend on market data topped $30 billion in 2019. With costs showing very little sign in coming down, at least in the short to medium term, now has to be the time for market participants to better grasp of not only what their costs could be at the end of the month, but also the precise areas of business consuming the most data.
The problem has been, and still is, seeking out those month-on-month cost anomalies. For example, why is it that fixed income and FX derivatives costs have all of a sudden doubled compared to the previous month? The trouble is it is nigh on impossible to get accurate answers to questions like this because the vast majority of investment firms have no fullproof way of analysing how spending evolves over time. In certain cases, financial instructions can experience a 10%+ increase on their monthly market data vendor bills.
It is not hard to see why – as every small incremental cost mounts up fast. First there are the direct costs for one or more sets of data – which leads to billing getting far more complex. Sure, a market data vendor may be adding lots of different add-on services to help clients save money, but at the same time, they will also be adding on more costs. If this was not enough, there are also the indirect costs around data governance and regulatory compliance. New rules, such as the Fundamental Review of the Trading Book (FRTB), means that investment banks will have no choice but to consume a lot more data to be able to run models and back testing.
All this begs the question; how exactly can firms gain more control of their market data spending? A good place to start is trying to reduce waste. This involves firms making sure they do not request new sources of data from their vendors that they are not going to use. If data vendors charge for every single piece of data that the client requests, then the client needs to make sure they are going to act on this information. Then there is the recycling of the data. Say an investment fund needed a new piece of data instantly, and also needed that same piece of data at the end of the day. If the fund manager already has the data, they surely, they do not need to request it again? It is all about being smarter about reusing whatever data the fund manager has received previously. After all, different trading desks are all consuming data and requesting information through the data management team, but it is hard for the trader acting on the data to work out how much the data actually costs. This is why being able to allocate these costs to the different trading desks is key.
When all is said and done, the only way financial institutions can harbour any hopes of overcoming this longstanding data cost problem is by deriving more insights to ensure they a squeezing every last drop of value from their market data. Technological advancements mean that firms can now keep right on top of not just their data direct costs, like complex billing, but also the indirect costs around regulation. With so many other cost pressures across the business right now, it is time financial institutions take advantage of new technologies to finally address the issue of rising market data costs that has, frankly, plagued the industry for too long now.
Cash was our past, contactless is our present, contextual payments are the future
By Jason Jeffreys, founder of FETCH
$6tn in the next five years, this is how much the world will spend through contactless payments, according to analyst firm Juniper Research. For many of us who have discovered and since relied heavily on contactless payments since its introduction in 2007, either through card, phone, or watch, or those of us who have taken a stroll down a covid-era high-street to see shop windows adorned with “card payment only” signs, this is hardly a surprise. Even the Church of England in 2018 equipped 16,000 religious sites with terminals to allow for contactless donations. So what is behind this rise? And what is next?
The switch from cash to contactless is a transformation of payments that is driven by four key factors: speed, security, accessibility, and hygiene. While businesses and customers alike have felt the immense benefits of the cash to contactless transition, the next iteration goes further by digitally transforming the entire transaction process. It’s that potential which pushed me to launch FETCH – technology that allows customers to order and pay from their phone, anywhere. By exploring the benefits already felt by our contactless present, I hope to show you why I’m excited to be part of the contextual payments future.
Aldi is all about low prices and this is achieved with efficiency – that is why their checkout staff are trained to scan as fast as possible, it’s why their barcodes are huge, and it’s why you can’t keep up. It’s all in the name of efficiency and cost saving, and contactless payments make this possible.
While increasing the rate of transactions has a direct impact on money through the till, there is an increase in the perceived speed which does wonders to get customers back through the door. Shoppers may have spent an hour or more in-store but their direct interactions with the shop and staff were quick and timely and that’s the experience they remember and the impression they build of the brand.
Aldi are not alone in realising this and while it is easy to point to the impact that contactless has had on the retail sector, its revolution has slowly crept into hospitality – an industry notoriously late at adopting new technologies.
High-street coffee shops rely on getting as many people as possible through the doors and back out again. They want as little disruption to your day as possible but more importantly, they want to process as many payments per hour as possible. Cash transactions are slow in comparison to a single tap, so for the coffee shops, this means fewer transactions per hour and money lost. For businesses in this sector who rely on periodic rushes, measuring performance per hour is a necessity and maximising revenue over these short windows is so important.
For reasons obvious to anyone who has been to a crowded hospitality venue, stood at a crowded bar or waited for waiting staff during a busy dinner rush, the businesses in this space already running on contextual ordering systems like FETCH have all reported a vastly improved staff and customer experience in hospitality venues. While it may be difficult to spot how these benefits can be felt in retail, this reality is not bound to fiction or the distant future – it’s being pioneered already in retail by Amazon.
In a well documented glimpse into the future of shopping, Amazon’s latest Seattle store removes the transaction element completely. Instead, you put your items in your trolley as you go round the shop, and the sensors and cameras accurately and automatically recognise the items, keeping a track and total, before taking payment automatically and digitally through your Amazon account once you walk the trolley back out of the store. Can you imagine standing in a supermarket queue to pay once you’ve experienced the ease, simplicity and effortlessness of that?
Smartphones have got smarter and they have revolutionised the way we get through the day. From how we discover, connect, and socialise, to how we organise, learn, navigate and search for answers – rarely an hour goes by where we aren’t using our phones for something.
As time moved on they only grew to become more capable, responsible for managing more aspects of our lives, and it was only a matter of time before they were capable of handling secure contactless payments. The leap for people to trust their smartphones with just one additional task was tiny.
When you couple this with debit and credit cards being enabled with contactless technology by default, the rise of wearables, and e-commerce growing massively, the results are clear – people are more trusting of online payments, are more familiar with buying in this way, and have more ways of making contactless purchases, than ever before.
In fact, a Mastercard survey in 2016 indicated that Brits carry less than £5 in cash on average, with 14% of people surveyed carrying no cash at all, and 1 in 10 replacing wallets and purses altogether, opting for a simple card in the pocket instead. Figures which have no doubt grown even starker since 2016.
When we take this into consideration with 99% of 16-24 year olds, 98% of 25-34 year olds, and 95% of 35-54 year olds all being smartphone owners, we begin to see the inevitability of contextual payments as the next iteration and how the response to contextual payments will be positive and welcome; something FETCH clients and the vast majority of their customers can all attest to.
Cashless payments means no cash in the till or on-site; no chance of mistakenly accepting fraudulent notes or coins; no trips to the bank to deposit or withdraw cash for the till; the end of time spent counting money every day, and the end of discrepancies which occur from this.
It limits the levels of theft, switches businesses over to an accurate, secure and efficient system, and gives business owners their time back. It makes tax returns, financial planning and forecasting and more all possible, easier and quicker and in short, it makes businesses stronger.
Contextual payments go further by offering really insightful data of what happens before and after people decide to part with their money; for example, how long they spend browsing before ordering, what they look at, what they’ve missed, when they order next and more. This means you are informed and can redesign and improve the user journey so it works better for you and your customers, all based on accurate, relevant and timely data.
As contactless payments evolve to contextual ordering, it’s important to choose a system that easily integrates with the wider business and your systems so you can continue to access the benefits of contactless. That’s why from day 1 of building FETCH I put so much emphasis on ensuring it integrates with one of the biggest and most popular POS systems in hospitality.
Initial adoption has long been the biggest barrier to widespread, sustained use of new technologies and going cash-free is no exception.
Given that the coronavirus thrives and passes through human contact and shared surfaces, going cash-free and contactless was a small, easy and obvious change to implement for businesses to become covid-secure and safer for customers and staff.
FETCH and other contextual payment systems are being used to go beyond this, to keep staff and visitors safe by limiting human contact beyond just payments. In our case, we have allowed hospitality customers to continue to browse, place their orders and pay, just as before, but without the need for repeated human contact at every single stage.
Given the health imperative and coercion from governments, local authorities and health bodies to switch to contact-free operations, businesses who may have once been years away from this change are laying down the infrastructure today out of necessity and it will be no surprise if contactless becomes a staple long after the coronavirus has left.
Post-coronavirus, contextual ordering offers businesses the chance to let the technology take care of these minor tasks, giving staff the space to instead dedicate their time, talent and energy towards elevating the overall experience. It’s the health imperative that acts as the gateway to this.
What does this transition mean for businesses? With visible consideration and effort put into hygiene, you are making your customers feel safe and cared for; by making transactions quick and painfree, you are giving your customers time to spend on the experience they came out for in the first place. In the process, you have created the ideal conditions for consumers to spend money and given them the confidence to do so.
I’ll end with the picture UK Finance data has painted through multiple annual payments reports: in 2006, 62% of all payments in the UK were made using cash; three years later it dropped to 58%; in 2016 the proportion had fallen to 40%; and just two years after that, cash formed just 28% of all UK payments. With a pre-covid prediction envisaging that by 2028 fewer than 1 in 10 payments will be made by cash, the widespread, covid-induced encouragement, adoption and enforcement of cashless policies in retail and hospitality has surely brought that many years forward.
Contextual ordering is the next inevitable iteration and if you were one of the few who reaped the benefits of going contactless early, you have the chance to be ahead of the curve once more. A welcome future for a multitude of industries is being set around us today.
The Rise of Contactless Payments
By Bilal Soylu, CEO of XcooBee
Today, banks involved in the issuances of credit cards, and companies at the nexus of merchant services, are experiencing a rare event in the industry.
For years, digital payment innovators fought a hard battle to adopt contactless systems and create standards. The effort and push came from companies with much of the effort directed at consumers to adopt their methodology. Whether it is Samsung Pay, Google Pay or Apple Pay they all had to overcome similar hurdles – consumers were reluctant to adopt a technology that did not have a sufficient number of merchants; thus, the progress was slow.
The COVID-19 pandemic rewrote the script in a whirlwind. All of a sudden, consumers began to demand contactless payment experiences in every way imaginable. The supply side push has turned into a demand side pull and the adoption rate is spiking.
This left banks, originators and companies involved in the eco-system with an interesting dilemma – fast decisions have to be made as to which digital technology to invest in and do they bind themselves, for multiple years going forward, to a specific infrastructure.
While previously the belief was that this could be explored over a longer period of time, the current reality is that these decisions are forced on institutions “overnight”. In this light, there are many different aspects to contactless payments and originators, and banks need to make smart bets on which type should be supported.
So, let’s look at all the relevant elements of contactless payments to explore a better model for institutional support.
General Drivers of Contactless Acceptance Growths
Physical safety from virus infection by avoiding touching 3rd party equipment or allowing safe distancing from other people and/or equipment is the main driver today. It has been emphasized by many epidemiologists as a basic requirement for conducting business. Consequently, it will be no surprise that safety is the factor that underlies the rapid adoption of a number of contactless payment technologies by once reluctant consumers.
We expect this to be a primary driver well into 2021. Thus, any technology to be rolled out in the short term should enhance safety in some form or contribute in a way to the improvement of safety.
An early benefit highlighted and emphasized by contactless technology providers was the data-security aspect that surrounds the transaction. Rather than exchanging the actual credit card number, for example, a tokenization is performed to create transaction specific tokens that are then used to complete the transaction. Even when intercepted, these tokens cannot be used outside this transaction and, thus, the approach is considered to be more secure.
Although the data-security value was incessantly marketed to consumers, most had, and still have, a limited understanding of the implementation of the technology. Thus, the appeal to the consumer with this benefit was not successful. However, the increased security elements were a clearer benefit for merchants and issuers. Hence, a steady growth of terminals and accepting merchants was the result.
In general, the tokenization approach to security has been chosen for many types of contactless payment systems, this includes NFC based card chips, digital payments like Apple Pay, Google Pay or Samsung Pay. However, for QR payments the use of tokenization should be verified as there are no current standards that govern its use consistently.
Convenience was the aspect of many contactless payments system that appealed the most to consumers prior to Covid-19. The ability to either very quickly conduct a transaction or very flexibly conduct a transaction drove consumer adoption. For example, being able to load many payment methods onto a mobile device that users carry with them anywhere increased the appeal of use to consumers.
Thus, when evaluating a particular contactless payment technology with a longer-term outlook the convenience aspect should be emphasized. Given the historical basis, consumers are very likely to be attracted by this aspect as the main driver of adoption again. A financial institutions’ post-Covid planning and investment models for contactless technology should consider this to be a major aspect.
Contactless Payment Categories
When we speak of contactless payment systems, we normally refer to any payment technology that can trigger a payment transaction in the physical space with direct consumer presence, but without direct contact with merchant equipment. Thus, we would exclude online and ecommerce transactions for this purpose.
We will focus on the two mainstream contactless technologies, NFC and QR payments, and review them here. Other contactless payment technologies exist but have not reached widespread adoption so we will only provide brief overview of those.
Near Field Communication (NFC) payments are the earliest form of contactless payments that found acceptance in the markets. Generally, two devices are needed and must be near each other to communicate via radio signals. Both the reader (interrogator) and sender (tag) must be within 4cm (1.5in) for the transaction to be initiated. ExxonMobile’s Speedpass is widely believed to be the first implementation of this touch and go type of pay experience that has come to exemplify NFC based contactless payments.
There are two common sub-categories from that technology today; The single card-based sender (tag) and the mobile-phone-based sender (tag). The mobile phone-based application tends to be more flexible allowing consumers to combine multiple cards into one mobile-wallet that is secured with some form with biometric access.
However, NFC signals are not uniform and different standards are used in the Far East (i.e. Japan) rather than in Europe.
NFC payments found early success in developed western markets where the population already had easy access to banking and bank issued card-based tags. However, in countries where the banking system developed later and card-based payments were not common, NFC payments did not flourish.
Thus, today, the market for NFC is mainly concentrated in Europe, Japan, and US.
The roll out of NFC requires hardware on the merchant and consumer side. The merchant hardware is normally leased, and leasing programs have been steady revenue generators for those companies. Whereas, today, the global contactless Point of Sale (POS) terminals market is poised to grow by $5.54 bn during 2020-2024, progressing at a CAGR of 16% during the forecast period, according to research done by Technavio.
However, with the pandemic, the speed of system activation has been a key criterium for selection of the technology. In this context, delivery of hardware, setting up of POS systems and testing connectivity slows down rollouts and potential revenue.
Similarly, requiring consumers to be equipped with supporting hardware may also introduce a friction element, especially in markets where NFC has gained less momentum.
QR codes are like 3D barcodes. The user scans the QR code via a smartphone and the smartphone, then interprets the barcode and a related website or application may complete the payment process. Like NFC, this can be done very quickly without any contact between smartphone (reader) and the item or display using the QR code.
Normally, QR codes are immutable, meaning that once generated they do not change. However, there are now dynamic smart QR codes, like the ones Xcoobee offers, that can overcome this limitation.
QR codes found strong distribution in markets where banking reach was limited in some form through government or market forces. The QR payment process, in many markets, also exemplifies a jump to direct digital payment, bypassing much of the banking system for purchase transactions. Especially when QR payment systems are connected to mobile wallets the provider of the wallet handles all transaction steps in-system, reducing friction and creating an ease to use and adoption. They have found popularity mainly in China, where AliPay and WeChat pay are gaining dominant market shares.
However, with the advent of COVID and the speed advantages in implementation and cost, other non-traditional markets such as EU and US are seeing dramatic increases in use of QR payments as well.
Activation of QR code payments commonly requires merchants to simply print codes, which can be accomplished with less hardware. The integration into bank systems is handled via merchant or bank app and the consumer simply requires a smartphone.
While bank offerings in this segment tend to be limited, given the simplified requirements, QR implementation can be quick for merchants to roll out.
Other Contactless Options
There are other contactless payment technologies that are currently competing for market attention and can be grouped into a biometric group and a technology group. The biometric group includes such options as voice, facial or palm recognition-based payments while the technology group includes options like Bluetooth and Farfield-type technologies.
None of these have gained sufficient market share or have execution or security advantages that would push them ahead without concerted efforts from large market-players. Similarly, there is no consumer advantage that would drive a consumer demand-based distribution for these technologies.
NFC vs QR
Which one should you choose to support? Each one of these contactless payment methodologies has advantages and disadvantages. NFC can be nominally faster to use for consumers and more lucrative for banks, but QR codes currently reach a wider market since more phones can read them than those that can read NFC tags.
Operational simplicity and speed also favor QR code activation, but if there is already and existing NFC infrastructure this may become a secondary consideration.
Simply speaking, we are living through unprecedented times, consumers are demanding contactless payment and creating a demand side wave in exchange for safety. How each institution answers this call best will depend on circumstances and context.
Overall, it may be advisable to hedge bets and support both methodologies and offer services based on both. Evaluate customer input, and then, adopt and activate the best option for your financial institution.
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